3 Signs Your Fitness Business is Financially Healthy

Author: Hayley Richardson | Categories: Entrepreneurship, Small Business
fitness business finance

fitness business finance

Fitness Business Owner? Get Your Financial KPIs on Track

As a personal trainer or fitness studio owner, you spend the majority of your days motivating everyone around you to be their best and healthiest self. You’re passionate about your work, and know that you’re making a true difference in your client’s lives.

While passion is a requirement in this industry, it’s not the only factor influencing fitness business success. By consistently measuring and tracking KPIs (Key Performance Indicators), you can get a snapshot of the health of your business while gaining greater visibility into what you can do TODAY to make smarter business decisions.

Here are three signs that your fitness business is in good shape and on track to crush the competition:

Your margins are climbing.

Revenue is a critical metric to track when determining studio health. Tracking your profit margins and EBITDA (earnings before interest, principal, taxes, depreciation and amortization) overtime can give you a solid 30,000 foot view of your studio’s financial health.

In 2015, fitness studios’ average EBITDA was $70,000 with a 24% average profit margin. To increase your profit margins, ask yourself: What aspects of my business are profitable? What areas of my business are ultimately hurting our bottom line? Is there a way I can make up for those losses? Should I increase my prices?

Client experience comes first.

Retention should be a top priority for any business, but in an industry facing rapid growth, keeping the clients you’ve already gained becomes even more critical. And while fitness studios average 24% attrition, lower than industry average, the pressure to deliver exceptional client experience continues to build.

It’s no secret that fitness studios tend to charge a premium when compared to their more traditional counterparts. In fact, according to the Association of Fitness Studios, fitness studios are charging “anywhere between 2x-10x more than the cost of monthly access to most traditional health/fitness clubs.” Why are clients willing to pay this premium? The value they receive. In order to maintain a healthy fitness business, owners must provide this unmatched value day in and day out. Easier said than done, right?

Here is a simple formula to determine your client/membership retention rate:

Retention Rate = ((CE-CN)/CS)) X 100
* CE = number of customers at end of period
* CN = number of new customers acquired during period
* CS = number of customers at start of period

Diversifying your service portfolio is a priority.

To keep your members engaged and stand out from the competition, evolving your offerings to match customer expectations is a smart move.

Revenue per client (RPC) is calculated by dividing your annual revenue by the total number of clients. 39% of fitness businesses track this number closely, and for good reason. There are a number of ways to keep your RPC steady or climbing. Here are a few examples:

  • Ask for customer feedback to uncover new opportunities
  • Consider diversifying your portfolio with new offerings or services
  • Upsell to your existing clients/members with additional products/services.
  • Offer an incentive through a promotion
  • Deliver exceptional services and nurture your top tier clients (AKA your advocates)
  • Stay open to new markets and new revenue streams

In the fitness business, great services equals higher profits. If you need a team to take bookkeeping off your hands so you can change the world WHILE growing your business, reach out. Acuity is here to help you determine exactly what you need to reach your fitness studio goals.

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